HSBC 2010 Annual Report Download - page 74

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Geographical regions > North America
72
Profit/(loss) before tax by country within customer groups and global businesses
Personal
Financial
Services
US$m
Commercial
Banking
US$m
Global
Banking &
Markets
US$m
Global
Private
Banking
US$m
Other
US$m
Total
US$m
2010
US ..................................................................... (2,306) 402 1,285 113 (39) (545)
Canada .............................................................. 110 505 248 – 4 867
Bermuda ............................................................ 47 32 49 (3) 7 132
Other ................................................................. – – – 1 (1) –
(2,149) 939 1,582 111 (29) 454
2009
US ..................................................................... (5,292) 158 505 (49) (3,626) (8,304)
Canada .............................................................. 17 347 159 – (100) 423
Bermuda ............................................................ 49 37 47 (2) 10 141
Other ................................................................. – 1 1 1 (1) 2
(5,226) 543 712 (50) (3,717) (7,738)
2008
US62 ................................................................... (17,364) 226 (2,899) 67 3,427 (16,543)
Canada .............................................................. 106 380 252 5 96 839
Bermuda ............................................................ 31 51 72 11 9 174
Other ................................................................. (1) 1 – – 2 2
(17,228) 658 (2,575) 83 3,534 (15,528)
For footnote, see page 83.
our business and, specifically, by the extent to which
unemployment rates improve and the recovery in the
housing market is sustained.
In 2010, we continued to reposition our core
businesses and we remained focused on managing
down our run-off assets. In addition, we made
progress with the changes required to conform with
new regulatory frameworks and policies.
In our core PFS business, we continued to grow
our Premier proposition, with customer numbers
increasing by 37% to over 700,000, and we expanded
our branch network, opening five new branches in
the states of California, Maryland and Virginia. Our
Card and Retail Services business continued to be
profitable, despite a decline in lending balances as
customers reduced their outstanding credit card debt.
In CMB, we increased pre-tax profits by 51% to
US$873m as credit quality improved and we grew our
revenue through repricing. In line with our global
strategy to be the leading international business bank,
CMB actively targeted the growing number of
companies with international banking requirements
achieving a 28% increase in referral volumes to other
HSBC sites, and GB&M drove cross-regional and
cross-customer group connectivity. GB&M and GPB
also continued to appeal to internationally focused
customers, attracted by the Group’s presence in both
emerging and developed markets.
Net interest income fell by 10% to US$12.4bn as
customer lending balances declined, mainly in HSBC
Finance, due to the run-off of the residual balances
in our Mortgage Services, Consumer Lending and
vehicle finance portfolios. We took additional steps
during 2010 to accelerate this process, selling
US$1.0bn in vehicle finance loans in March and the
remainder of the portfolio (US$4.3bn) in August to
the same purchaser. Lower balances in our Card and
Retail Services business reflected a decline in active
accounts, actions taken to mitigate risk and an
increased focus by our customers on reducing their
credit card debt.
Asset spreads in Mortgage Services and
Consumer Lending widened, reflecting lower funding
costs and higher yields resulting from lower levels of
modified loans and delinquent balances. In our Card
and Retail Services portfolio asset spreads also
widened due to lower funding costs, re-pricing
initiatives and contract re-negotiation with certain
merchants, partly offset by the effects of the CARD
Act.
Average customer deposit balances increased
in PFS and CMB as we continued to grow our
customer base. In GB&M, our increased deposit
base reflected a rise in repurchase transactions.
Deposit spreads improved, despite falling interest
rates, mainly due to repricing as competitive
pressures eased.
Lower net interest income from Balance Sheet
Management reflected the sales and maturities of
higher yielding assets and the reinvestment of the
proceeds into lower yielding, lower risk assets.